Shopify Shows Strong Global Momentum, But Guidance Raises Questions On Profitability Path

Core Viewpoint - Shopify Inc reported strong fiscal first-quarter results with a revenue growth of 26.8% to $2.36 billion, surpassing analyst expectations, although adjusted EPS of$0.25 fell slightly short of the consensus estimate [1][2]. Financial Performance - Quarterly revenue increased by 26.8% to $2.36 billion, exceeding the analyst consensus estimate of$2.33 billion [1]. - Adjusted EPS rose by 25% to $0.25, but missed the analyst consensus estimate of$0.26 [1]. - Gross merchandise volume (GMV) grew by 22.8% to $74.75 billion, while merchant solutions revenue increased by 28.9$1.74 billion [2]. Market Trends and Guidance - The second-quarter guidance anticipates continued strength in GMV, projecting mid-20s revenue growth and high-teens gross profit growth [4]. - Analysts noted that Shopify's GMV multiplier as a percentage of U.S. eCommerce growth remains strong, indicating potential market share gains even amid a slowdown in U.S. eCommerce growth [7]. International Expansion - Shopify is benefiting from the globalization of commerce, with significant market share gains abroad, particularly in the North American market [6]. - Cross-border trade constitutes 15% of GMV, with 1% of overall GMV related to imports from China [9]. Analyst Ratings and Price Targets - Piper Sandler maintains a Neutral rating with a price target of $104, while Goldman Sachs holds a Buy rating with a revised price target of$120, down from $130 [11]. Margin Insights - Free cash flow margins are expected to remain in the mid-teens range, with a decline in these margins viewed negatively [5]. - Pressure on gross margins is anticipated in 2025 due to various factors, including the PayPal partnership and the impact of longer paid trial lengths [12].